Supreme Court Rules in Favor of Coinbase
On June 23, the United States Supreme Court ruled in favor of Coinbase, a cryptocurrency exchange, in a split decision that will end legal proceedings against the company in two California cases.
The plaintiffs in the class-action lawsuits asserted that Coinbase did not offer adequate recompense after customers lost money, and that Coinbase allegedly utilized deceptive advertising.
Coinbase requested the district courts responsible for the cases to dismiss them, claiming that users had agreed to settle any disputes through arbitration rather than taking legal action when they created their accounts.
According to a court document obtained by Courthouse News:
This decision by the U.S. Supreme Court is the first of its kind regarding cryptocurrency. Justice Brett Kavanaugh wrote the opinion, which was agreed upon by four of the court’s other conservative justices in a 5-4 vote.
California district courts have now referred both cases to arbitration, which is usually more economical for businesses than litigating or settling disputes through the courts.
Whilst this is a victory for Coinbase, it could also have a reverberating effect throughout the crypto sector.
In its opinion, the court stated that when a person opens a Coinbase account, they accept the conditions set forth in Coinbase’s User Agreement, including the arbitration clause requiring that any disputes arising from the agreement be settled through binding arbitration.
After the district courts of California rejected Coinbase’s request for arbitration in the cases mentioned, the company submitted appeals asking for a delay while the appeals were processed; however, the courts were disinclined to stop the civil cases despite the company’s appeals.
The Supreme Court’s ruling on June 23 grants Coinbase the right to appeal before the class action suits can proceed, which is in accordance with the U.S. Federal Arbitration Act of 1925, as is normally the case.
Implications of the Ruling on the Crypto Sector
It is currently unknown how this ruling will affect other legal cases involving cryptocurrency companies, and there is no evidence that this case will have any bearing on the Securities and Exchange Commission’s current lawsuit against Coinbase.
The SEC has filed a lawsuit against Coinbase for violating US securities regulations.
It is noteworthy that the Supreme Court’s decision effectively supports the notion that existing regulations can be applied without difficulty to matters concerning the cryptocurrency sector.
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